Accounting standard followed by builder
This query is : Resolved
25 July 2015
As per AS 7 Revenue & Cost should be recognized as per estimated revenue & Estimated cost of whole project.but in case of builder how can we determine
the value of unsold flats if the per sq feet rate is fluctuating(i.e. diff. rate is charged to different customers). whether AS 7 will be applicable in above case or can we make proportionate of revenue & cost only on agreement basis and cost incurred basis.
the value of unsold flats if the per sq feet rate is fluctuating(i.e. diff. rate is charged to different customers). whether AS 7 will be applicable in above case or can we make proportionate of revenue & cost only on agreement basis and cost incurred basis.
25 July 2015
Once it is consturcted then follow AS 9 revenue recognition
25 July 2015
But my question is during Construction period Which AS to be follow? If AS 7 is to be follow how to determine the value of unsold flats if per sq. feet rate is fluctuating as to arrive at total revenue & total project cost?
25 July 2015
you need to follow proportinate completion method in case flats are under construction as per as 7.
cost incurred in fy needs to be booked while under construction
cost incurred in fy needs to be booked while under construction
25 July 2015
Ok sir, But what about revenue whether we have to book revenue on POCM method of only sold flats or on both(Sold Flats & Unsold flats). if both how to value unsold flats?
25 July 2015
AS 7 PCM says both income and exp in fy msut be recorded as per PCM method.
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25 July 2015
OK agreed But sir how to value as per PCM i.e total estimated revenue & cost or we have to take value of sold flats and apply percentage on that?
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